Tesla Rival Polestar Could Reach $21B Deal To Merge With SPAC Gores Guggenheim Today: WSJ

Electric vehicle maker Polestar could reach a deal to go public with special purpose acquisition company Gores Guggenheim Inc GGPI on Monday, Wall Street Journal reported, citing people familiar with the matter.

What Happened: The deal is expected value the Zhejiang Geely Holding Group Co GELYF and Volvo Cars Group-backed Swedish company at $21 billion and could be one of the largest recent SPAC deals in the recent past.

Polestar was launched in 2017 and has a manufacturing facility in China.

Polestar, seen as Tesla Inc TSLA rival, counts actor Leonardo DiCaprio as an investor. As per the WSJ report, existing investors will receive an additional $250 million investment as part of the deal.

Why It Matters: The latest valuation number is a significant markdown from earlier this year when the Hangzhou-based Zhejiang Geely Group reportedly planned to list Polestar for as much as $40 billion, as per a WSJ report in April.

Polestar had in October recalled all of its Polestar 2 electric vehicles — marketed as a rival to Tesla’s Model 3 — to fix a software glitch that could cause the vehicle to lose power while driving. Earlier this year, Polestar said it would assemble its third model at a Volvo plant in South Carolina. 

Geely is playing catch-up in the electric vehicle space with rivals such as Tesla, BYD Co BYDDF and others establishing themselves.   

The company also faces intense competition from homegrown electric vehicle startups such as Li Auto Inc LI and Nio Inc NIO. 

Price Action: Geely Automobile shares closed 1.84% lower at $2.93 on Friday.

Photo: Courtesy of Polestar